CIÉ set for €25m windfall from offices

The national transport authority is to cash in on Spencer Dock ground leases

CIÉ IS SET to benefit from a windfall of about €25 million shortly when it sells its freehold interest in ground leases on three office blocks mainly occupied by PricewaterhouseCoopers (PwC) at Spencer Dock in the north Dublin docklands.

The decision to cash in on the ground leases will be seen as a move by the national transport authority to build up its cash resources at a time when the Government is finding it increasingly difficult to maintain a subsidy of €242 million to support national bus and rail services.

A range of high-quality office and apartment buildings were developed in recent years at Spencer Dock – a former railway yard extending to more than 50 acres – by Treasury Holdings under a master development agreement with CIÉ.

Once it finds a buyer for the first batch of 99-year ground leases, it is expected to offload other ground leases on buildings which have also been completed and let.

Treasury Holdings had developed only 20 of the 50 acres in Spencer Dock by the time the property market collapsed. Treasury, whose loans are in Nama, is currently challenging the State agency in judicial review proceedings in the High Court.

Treasury is paying almost €2 million annually in ground rent fees to CIÉ out of a rent roll of €13 million on three office blocks which extend to 27,870sq m (300,000sq ft). PwC occupies about 20,438sq m (220,000sq ft) with the balance being rented by the Dutch bank, ABM Amro, and Ecclesiastical Insurance. The office leases have about 20 years to run.

Some 100 of the 140 car parking spaces in two basement car parks are let to PwC staff, while the remainder are rented mainly by ABM Amro and the insurance company. A relatively small area of office space is one of the three blocks is currently vacant. Treasury Holdings has already paid CIE 17.5 per cent of the selling prices of almost 500 apartments in Spencer Dock in lieu of the ground rent.

CIÉ is understood to have appointed Ann Hargaden of Lisney to handle the sale of the PwC ground leases. The company has put on the record that it “reserves the right not to proceed with the sale if no acceptable bids are received”.

Market sources have indicated that there should be no great difficulty in disposing of the ground leases because of the relatively long lease contracts on the office space, the security of income involving three blue-chip companies and, finally, the high quality of the office buildings.

Adjoining buildings include the Dublin Convention Centre, also developed by Treasury Holdings, and, on the opposite side, the partially-built headquarters for Anglo Irish Bank, which is now to be developed for the Central Bank.

A commercial property agent specialising in the investment market said he expected that a number of cash-rich Irish investors would pitch for the ground leases. He also expected interest from a number of UK companies with a lot of expertise in this area.